Oil-Dri Corporation Of America

Good day, and thank you for standing by. Welcome to the Oil Dry Corporation of America fourth quarter and fiscal year 2024 earnings discussion. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, President and CEO Dan Jeffery. Please go ahead.

Thank you, Daniel, and welcome, everyone, to our fiscal year end investor teleconference. We are expanding today's to up to 45 minutes. If we have questions, we want to give you extra time. And we're also going to cover the very exciting Ultra Pet acquisition. With me on the call today is Susan Cray, our CFO and CIO, Aaron Christensen, our VP of Operations, Wade Robey, VP of Ag and President of Amlin International. Chris Lampson, Group VP of Retail and Wholesale. Laura Sheelan, Chief Legal Officer and Vice President and General Manager of Consumer Products Division. Tony Parker, Vice President of Legal. And Leslie Garber, Director of Investor Relations. And Leslie, will you take us through the safe harbor?

Yes. Thank you, Dan. Welcome, everyone. On today's call, comments may contain forward-looking statements regarding the company's performance in future periods. Actual results in those periods may materially differ. In our press release and in our SEC filings, we highlight a number of important risk factors, trends, and uncertainties that may affect our future performance. We ask that you review and consider those factors in evaluating the company's comments and in evaluating any investment in oil dry stock. Thank you for joining us.

Great. Yep. Thanks, Leslie. And before I turn it over to Chris, just some general 50,000-foot comments. We were at our board meeting this week, and it was very nice. At the end, we always go around and we have all our board members give their perspective on anything that they want to contribute. And Commissioner Emeritus Bud Selig, who's been on our board since 1969, was remarking how amazed both my father and my grandfather would be. He knew both, and he's been on our board since 69. I look back and we did $5,700,000 of sales the year Commissioner Selig joined our board. We went public in 71 with only $7.2 million in sales, which is sort of remarkable. It took us 51 years to get to $100 million. It then took us 15 more to get to $200 million in sales, another 15 to get to $300 million in sales. And then it took us two years, fiscal 23, to get to $400 million. And, you know, the question is, where will we be in fiscal 25? Nobody knows. We have our safe harbor. But I can tell you, given the momentum of the business and what we see, we feel very bullish that this snowball is going to continue to roll. So it's pretty amazing what the team has accomplished. And as I told our team, and you as investors are really investing in the people at Oil Drive, I told our team both at our senior retreat and at our global sales meeting, look, I've been doing this for 30 years. So August 1st started my 30th fiscal year as president of Oil Dry. The real difference the last three to five years is the team. It's the people you're hearing from today, and then they've raised the bar on the people that are underneath them. So pretty amazing. humbling, and we're very excited about the future, but we're proud of the year that we just delivered. Very excited about the acquisition of UltraPet, the biggest in the company's history, and led in large part by Chris Lamson. So, Chris, please take it over.

Thanks, Dan, and good morning, everybody. So, yeah, a little update on our first full quarter of ownership of UltraPet. which we finished the sale or completed the sale at the end of Q4. Really pleased to share with you that even with acquisition accounting adjustments, the UltraPet business was accretive to earnings in the quarter. When I wrap up, Susan will follow here shortly and will provide some specifics on the acquisition accounting, but again, accretive, even with that acquisition accounting in the first quarter that we owned it, the recently completed Q4. Really pleased to report that the acquisition, the post-acquisition, our initial distribution efforts, which candidly we hit hard given that we were right in the middle of retailer decision-making season, have been met with really strong success. Not only do we gain new distribution on the Ultra brand, but in what I think can really only be described as a remarkable accomplishment in only a few short months, we created two new SKUs of microcrystals under the Cat's Pride brand name. So in the fourth quarter of fiscal 24, we began to sell and then in early Q1 began to ship those new Cat's Pride microcrystals. You can actually now find them already on the shelf at Wegmans, and they'll be hitting the shelf very soon at several other, particularly East Coast retailers. I'll share a few numbers that help demonstrate the distribution success I'm talking about here on both Cat's Pride and Ultra since the acquisition. Since the acquisition, we've added distribution of either Cat's Pride or Ultra at 16 new retail banners mostly regional banners. And when we completed the acquisition, the Ultra team had been focused on the East Coast. So we really took what they were driving and helped them push some stuff over the finish line. So that's where we've gained the most initial traction. Across those 16 retailers, we've added over 5,700. That's 5,700 points of distribution. You might ask what a point of distribution is if you're not as familiar with consumer goods companies. The number of item store combinations, that's really best described probably in an example here. So if I took a fictional retailer, let's call it Royal Retail, and they have 100 stores and we added three items of our Cat's Bride crystals or Ultra crystals, that would be 300 new points of distribution. So those 5,700 points of distribution did come across both Cat's Bride hitting the shelves now and the Ultra brands over the last four months, four or five months. with the majority actually being on the aforementioned new Cat Sprite items that we developed in the fourth quarter. For perspective, when we purchased the business, we had about 4,500 points of distribution on the Ultra brand, so we've actually collectively more than doubled our points of distribution in a pretty short period of time. We're really pleased with those results. Do let me temper that doubling, though, a little bit. Ultra also had a private label business. They had an e-comm business. And, of course, those businesses are not counted in that doubling of distribution. But when you look at our branded distribution, we've more than doubled in the period since the acquisition. Now I'm going to move from the front office to the back office, if you will. I'm also happy to let you know that as of October 1st, we integrated the Ultra Pet business onto our oil dry ERP system. These conversions always have a hiccup or two. I tell you, ours were very minor and were largely or not completely seamless to our customers. We're accepting all orders, we're pricing them right, and we're getting them shipped out on time in the oil dry system. I'd also like to take a quick moment to publicly recognize our South Carolina-based Ultra Pet teammates. In the three days prior to the conversion, as you're well aware, Hurricane Helene had a really tough impact in the Carolinas. Our ultra pet business and teammates mostly sit in the Carolinas. Yet these teammates were really on and on in getting through our conversion. I can tell you that they certainly lived oil drives lesson learned around those that say that it cannot be done, should get out of the way of those that are doing it. Thank you to those teammates in South Carolina for getting it done. in the face of power outages, spotty internet, and some real personal sacrifice. Systems integration will now allow for us to work with our customers to combine Ultra and Legacy oil dry litter products on the same order and truck. We'll be working with them over the next few months to do that, which will really drive efficiencies for both oil dry and our customers. Finally, speaking of that efficiency, we're beginning to realize cost synergies as well. Most notably, we recently completed work to rationalize our sales broker network, really ahead of schedule and driving savings through both a rate reduction with our existing brokers as we folded the Ultra business into them and then housing a couple of larger accounts. All in all, we have plenty of work left to do, but we're pleased with our initial efforts and our initial result from the Crystals business.

that i'll turn it over to susan who will provide some further perspective on overall oil dry financial results and get a little deeper into the acquisition accounting on ultra pet susan yeah thank you chris and as you can tell from chris's comments the strategic acquisition of ultra pet has been exciting for our team and for the team in anderson as well from an accounting standpoint Ultra Pet was acquired on May 1, 2024, which was the first day of our fiscal fourth quarter. As detailed in Note 2 to our financial statements, Oil Dry acquired all the issued and outstanding shares of the capital stock of Ultra Pet for $44.3 million net of cash acquired. The financing of this acquisition was done through a combination of cash on hand, the issuance of notes, and a draw on our credit facility. The financing was actually completed in both the third and fourth fiscal quarters. So summarizing both from a timing and detail standpoint, because we did cross over quarters, Oil Dry issued $10 million in aggregate principal amount of 6.47% Series B senior notes due April 30, 2033, pursuant to our shelf facility provisions of our note agreement with Prudential Affiliates. These notes were issued on April 30th, making this a third quarter financing event. The following day, on May 1st, we drew 10 million on our 45 million revolving credit facility with BMO Bank. This 10 million draw occurred during our fiscal fourth quarter. Our draw with BMO is subject to a variable adjusted SOFR-based rate plus a margin that varies depending on our debt to earnings ratio. At the date of draw, that rate was 5.3%. Being on the UltraPet acquisition, during our fiscal fourth quarter, we engaged a third-party specialist to assist with the formal valuation of our acquisition of UltraPet. As a result of that valuation and analysis, The major categories of assets that we booked as of July 31st, 2024 were as follows. We booked working capital of 10.7 million, intangible assets of 25.6 million, the majority of which includes a customer list asset valued at just over 20 million that will be amortized over 18 years. And we also booked goodwill of $11.8 million. Now switching to a performance standpoint, we are pleased, as Chris mentioned, that the UltraPED acquisition was accretive during the fourth quarter, including transaction costs. It generated $4.1 million of net sales and $200,000 of pre-tax income. These results include a charge to cost of goods sold of $449,000 for the inventory step-up associated with acquiring UltraPet. These results also include $300,000 of general and administrative transaction-related expenses. We anticipate a similar level of cost in both of these categories during the first quarter of fiscal 25. Now let's switch from the purchasing of UltraPet to the integration of this acquisition which Chris mentioned a little bit in his comments earlier and which has been proceeding well. As of October 1st, we have migrated UltraPET from their legacy systems to OilDry's human resource information system and, as Chris mentioned, to OilDry's integrated enterprise resource planning system. Both migrations have been accomplished successfully, and UltraPET is now fully integrated into our applications environment. And we are very pleased with the success there. Now let's switch gears and talk about oil dry as a whole. Taking a look at our financial success during 2024, our consolidated net sales for the fiscal year reached an all-time high of $437.6 million, reflecting a 6% increase over the prior year. Record revenues were achieved in both the retail and wholesale and business-to-business product groups. This top line growth was due to higher prices and improved product mix across both of the operating segments. Increased sales volume of fluid purification products, as well as the fourth quarter inclusion of incremental business for the acquisition of UltraPet also bolstered our sales. Revenue from domestic cat litter excluding co-packaged items and revenue from fluids purification products increased by 8% and 19% respectively compared to the prior year. While annual revenues from animal health products remain flat, the company's commitment to this growth opportunity remains strong. We believe that the initiatives that were executed during 2024 to reposition the business will position us well going into fiscal 2025. On the flip side, market and customer impacts on demand in our agricultural and co-packaging coarse litter businesses declined by 17% and 4% respectively during fiscal year 2024. The fact that we had a record year despite these two challenges is reflective of the value of the diversity of Oil Dry's portfolio of product. Our annual consolidated gross profit was a record $125 million, an increase of 21% over the prior year, with margins expanding at the gross margin level to 29% in fiscal year 2024 from 25% in fiscal year 2023. Despite the increase in our domestic cost of goods sold per ton of 6% compared to fiscal 2023, which was driven by higher labor, depreciation, and freight costs that were only partially offset by lower natural gas and packaging costs, our improved pricing and profitable product mix helped achieve this record gross profit. Fiscal year 2024's consolidated operating income reached a record high of $51.6 million, reflecting a large 10.6 million or 26% increase over the prior year. This record result is inclusive of selling general and administrative expenses that were 18% higher in fiscal 2024 compared to the prior year. This 18% increase consists of both ongoing and one-time expenses. Significant expenditures reflect elevated compensation costs resulting from increased performance-based incentives, as well as a few key planned headcount additions. In addition, we had increased advertising costs to promote Cat's Pride lightweight litter. There were expenses related to the Ultra Pet acquisition, including transaction and integration costs, as well as the amortization of the intangible asset that I mentioned earlier. Now let's hit a couple other items of recent financially related news. On October 9th, the Board of Directors of Oil Dry approved a two-for-one stock split in the form of a stock dividend with the goal of increasing the float to improve the liquidity of the stock and to reduce the share price per share to make it attractive to a potentially broader set of investors. The stock split is subject to stockholder approval of an amendment to the company's certificate of incorporation to increase the number of authorized shares of common stock in order to accomplish this split. The company intends to seek stockholder approval for this amendment at our upcoming annual meeting on December 11, 2024. If the certificate of incorporation amendment is approved by our stockholders, The company expects to file the amendment with the Secretary of State of the State of Delaware and to implement the stock split and authorize share increase promptly following the annual meeting. Our plan is that following stockholder approval and the filing of the effectiveness of the Certificate of Incorporation Amendment, stockholders of record at the close of business on December 20th, 2024, the record date of the stock split will receive one additional share of common stock for every share of common stock held on the record date, and one additional share of Class B stock for every share of Class B stock held on the record date. Oil Dry expects the additional shares will be distributed after market close on January 3, 2025. Shares of Oil Dry's common stock are expected to begin trading on a post-split basis at market open on January 6, Another recent development is an upcoming change to our SEC reporting status. Based on our position as of January 31, 2024, it was determined that beginning with fiscal year 2025, OilGri has grown to a size that no longer qualifies for SEC small reporting company status. As such, investors can expect to see expanded disclosures in our 10Qs and 10Ks beginning with our fiscal year 2025 SEC filings. So that's all good news. And in other news, on September 30, 2024, the company entered into the Eighth Amendment to our credit agreement with BMO Bank. The purpose? is to upsize our existing credit facility to create additional financial capacity for oil dry should it be needed or desired in the future. This amendment increases the amount the company may borrow on its revolving line of credit from the current level of up to $45 million to an increased level of up to $75 million, which provides oil dry with additional financial flexibility. This amendment also adds a new accordion facility, which will allow the company to increase the revolving line of credit by up to an additional $50 million for a total credit facility size of 125 million. In addition, the amendment extends the termination of this agreement to September 30th, 2029, while the covenants remain unchanged. These changes are part of our ongoing efforts to provide financial flexibility that positions Oil Dry to be able to opportunistically invest in growth opportunities, such as we did with the Ultra Pet acquisition, when those opportunities arise. And with that, Dan, I'm going to turn it back over to you for comments and Q&A.

Great. Thank you, Susan, and thank you, Chris. Very exciting and a great review. We are now going to turn it over to the Q&A section. We've gotten a bunch of good questions in from our shareholders, and we'll do our best to answer as many of them as we can in the time remaining. So Leslie, walk us through our questions.

Yes. And for anyone who hasn't submitted any questions, please use the Ask a Question button on the webcast and click Submit. So our first question comes from John Bear from Ascend Wealth Advisors, and he says, congrats on a strong finish and record year, and I'm pleasantly surprised at the two-for-one stock split proposal. Agreed, it would help improve trading liquidity. His first question is, fluids purification product sales were up a solid 19% year over year. Is there any particular market that has been especially strong, such as food oils or transportation fuels? Dan, I'm going to turn it over to you.

And Bruce Patey's not here today, but fortunately we have his answers, and I'll do the best I can to represent Bruce. So renewable diesel has absolutely been driving the growth in our fluids purification division. New plants popping up all the time.

Perfect. Next we have a couple questions regarding amline. I'm going to combine them. What progress is Amlin making? What do you think it will take for the poultry and swine industries to adopt your product on a worldwide basis? And how are trials going with larger prospective customers? Wade, I'm going to turn that over to you.

Yeah, thank you, Leslie, and thank you for the question as well. So there's a couple of different aspects that were asked in that question, and I'll try to take them kind of one at a time. First, in terms of the use of our product or its adoption around the world, we already see that in all world areas that we sell. The types of products that we have in our portfolio and specifically the Amlin oil dry technology is highly valued by our customers. And we have a good adoption rates where we market. Our markets, as we mentioned previously on calls, are in Asia Pacific and China. in the Americas, including both Latin America, Mexico, and in North America as well. In terms of progress with our customers, last year was frankly a difficult year in ag, and really that has persisted for the last 12, 18 months. As we close the year, we started to see recovery in the market across ag and especially in the food production side, and we're closing the year with really good momentum. We have trials underway as we have previously in all world areas and are seeing success with our products as customers complete those and begin moving to buying decisions. In terms of a pivotal or an aha moment, We don't expect there to be a dramatic change. We just expect to see continued growth as our products are evaluated by our customers and we have the opportunity to sell them into their rations. So just continued strong growth in all the areas we're pursuing.

Great. Thanks, Wade. Our next question comes from Ethan Starr, an individual investor. What opportunities do you see to expand distribution of silica gel crystal cat litter via new customers, private label, and in Europe? Chris, will you answer that, please?

Yeah, Ethan, thanks for the question. And I'm particularly glad you asked it because in my comments, I really focused on the distribution growth relative to the branded side. Just as we are on our base clay business, we're extremely focused on growing the private label piece of the crystal litter business. The Altura folks had a good foundation with a couple of key private label customers, and we're really looking to build on that. We believe that we can offer a significant value in the segment and continue to make a good margin. The one thing I would add there is there are a couple of pieces of evidence in the market that the segment has expanded to the point where it can in fact, support a private label business at retailers in a really meaningful way. In other words, the velocities are out there that says the crystal litter segment is ready for a good value private label player. We are engaged with several both national and super regional customers right now in conversations about developing private label crystal litter products for them. We like the brand. We got the brand out there quickly. We will build on the Ultra brand as well where appropriate. Europe, candidly, is TBD. The Ultra folks were selling some product into Europe and we're in the process of assessing our market opportunity there. I think it will candidly be largely opportunistic for us. What we're really leveraging with the acquisition is our strong existing retailer relationships, our ability to help them manage their brands through private label, through their private label business, and building out distribution in crystals with them.

Thank you. Our next question comes from Robert Smith from the Center for Performance Investing, and he asks, do you expect to maintain gross margins this year? Susan, will you take that one?

Sure. Although we don't give forward-looking guidance, here's a couple things I would talk to this. First of all, we don't know for sure where costs will go, but what we can say is the markets have been rational in allowing us to take pricing when costs have increased. The second thing I would say that the focus areas of our portfolio, including fluids purification and renewable diesel, the lightweight cat litter, and the animal health products are all higher value added products. So, as we see growth in those product lines, we would expect to see the favorable impact on our gross margins.

Okay, great. Thank you. Next, we have a question from Tyler Ventura. He's from Diamond Hill Capital. How has your vertically integrated business model contributed to your competitive advantage, particularly in terms of cost structure and product innovation? Is purchasing a silica gel-based crystal cat litter alternative an indication that clay is losing its luster, so to speak, in the litter market? And I'm going to turn that over to Dan.

Yep. Thanks, Tyler, for your question. And I will say it's both vertical and horizontal. Because many of our competitors are vertically integrated, but they're not as horizontally integrated meaning from the west to the east coast of the US so we have plants all the way from California to Georgia and Then plants in the middle and that does give us a strategic competitive advantage Freight is a big piece of the delivered cost of goods of many of our product lines and so being geographically situated that way has helped us provide high quality low-cost products to our very demanding customers. So it's definitely been a source of competitive advantage for us. In terms of silica-based gel, an indication of clay losing its luster, I would just say it's a fast-growing segment. Clay is still by far the dominant, has the dominant position in cat litter. But I think what it really shows is that consumers are more and more seeing their four-legged furry friends as family members. And they're willing to spend more if they believe they get more performance, either odor control, dust, tracking, whatever the metrics are that they're looking for. So I think it's all positive. It's just the pie is growing. And Crystals has taken a slice of that pie. But I think it's over, Laura, you can help me. It's over $3 billion now at retail. Yeah, in the US. So the pie is growing, but Crystal's is definitely taking a bigger share, but it's still a very small percentage of the overall market.

Great. Thank you. John Bear has another question, and we actually received two questions regarding this. Where does debt pay down fall in the capital allocation priority chain? Susan, you want to take that one?

I'd love to. Thanks, Leslie. When we think about our capital allocation, we are committed to first and foremost reinvesting in our business to generate returns for you, the investors. So that takes the form of both growth capital spending and capital spending in our aged infrastructure. And I saw a question later on, so I'll insert it right here. There was a question about will the CapEx level be similar in 2025 as it was in 2024, and I would say, yes, we expect to spend at a similar level. After we invest in our business, we next prioritize the dividend for our shareholders, as we know that there are shareholders out there who invest in us because of the predictability of that dividend. Following that, we also prioritize any M&A opportunities which is why we try to keep a lot of dry powder, which is why I talked about the expansion of our revolving credit facility earlier. And then to the extent that the interest expense on our revolving credit facility were to exceed the interest income we're making on our short-term cash investments, we would consider paying down that revolving credit facility since it financially makes sense. So that's kind of the order of it. And Leslie, back to you.

Okay, thank you. Ethan Star has another question. Do you expect sales growth of fluid purification products for renewable diesel to continue increasing at percentages similar to fiscal 24? And is oil dry selling fluid purification products into any of the international markets for renewable diesel, such as Brazil and Indonesia? And Dan will handle that question.

Yep. Yeah, we do expect continued growth in F25 at a similar rate as new plants come online and in our best market, which is North America, which is great. We do not sell into Indonesia today. However, we are active in Brazil. A significant portion of our fluids purification business is in North America, and we do have customers in Europe, Latin America, and Asia.

Great. Thank you. Robert Smith has a question. Are you hedging natural gas into calendar 2025? Aaron Christensen, please answer that.

Yeah, Robert, thanks for the question. Happy to answer it. Obviously, I understand that natural gas is a key component of our cost structure and input cost. We're deliberate about how we both consume and purchase. We like to avoid using the word hedge. Hedge implies that we can beat the market and ultimately purchase over time at a lower cost. That is not our objective. Yes, we do continue to make forward purchases of natural gas out a period of multiple years in layered, revolving purchase strips that help allow us to predict and buffer volatility for a portion of our consumed natural gas. And we will do so for the foreseeable future.

Great. Thank you. We have another question from Tyler Ventura. How is the ad spending looking in terms of being growth-oriented, which should have a high ROI versus defensive ad spend, which is a lower ROI? Chris, can you answer that, please?

Yeah, thanks, Tyler. What I would tell you is we spend what we refer to as up the funnel, and that can be a little bit more brand or segment growth. oriented, a little more awareness oriented, and maybe a little less conversion or ultimate sale oriented. The shift we made about a year and a half ago was in that area within lightweight. We really started talking to the category message within lightweight and the broader consumer benefit of lightweight. Where that really helps those dollars work harder for us is it not only lifts our branded business, but we believe it lifts our private label business as well. We toggle specifically a bit between defensive spending down the funnel where we think we need to defend the business against, you know, competitors primarily and and and more what I would call more aggressive spending. But what I can assure you, we look at on a. Regular, ongoing, basically constant basis is not just return on that investment, but we've got some ways to measure incremental return on that investment. We call the metric IROAS, incremental return on advertising spend. And we have some pretty good tools that help us toggle, like I said, in almost real time between that more defensive spend and aggressive spend to drive the most incrementality possible.

Great. Thank you. John Bear has a question regarding cat litter. Has your higher cat litter sales increased your overall market share percentage? And if so, has it been at the expense of competitor, brand names, private label, or a combination? Chris?

Back to me. Thanks, John. In the most recent period, our share was up modestly. It's challenging without spending a bunch of money with our syndicated provider to know exactly where that share is sourced from. With that being said, what we really like is that our areas of focus for growth really being both lightweight and crystals. When you look at how the categories performed over the last several years, they're growing significantly faster than the category. So those specific pies, back to Dan's previous answer, those specific pies where we're focused are growing, and that in turn helps drive our share growth.

Great, thank you. Robert Smith has a question for Susan. What is your projected tax rate for fiscal year 25?

Thanks, Leslie, and thanks for the question. While we don't give forward guidance on tax rates, what I would say is that with the acquisition of UltraPet, the income that comes from the crystals business is not does not have the depletion deduction available to it that the rest of our business does. So said differently, as that becomes a bigger part of our portfolio and more profitable part of our portfolio, it will come with a slightly higher tax rate.

Great, thank you. The next question is from Tyler Ventura. How do you feel today about the strategic value and your future opportunities buried in your substantial clay reserves? Is that still a significant competitive advantage as you look out into the next 5 to 10 years? Do you still see opportunities to buy more land and or reserves? Dan?

Yep. And absolutely, that is a huge strategic competitive advantage for us. There have been no real new greenfield clay plants built in the US that I can remember in the last 30 years. The regulation, getting the reserves, and then actually the capital to build the plant is just prohibitive. So we're grandfathered in. We try and add on more clay than we use every year. If you look back, we were mining more clay 25 years ago than we are today. We used to sell over a million tons a year, which meant we were mining about 2.5 million tons. This past fiscal year, we sold a little over 800,000 tons, so maybe around 2 million tons of clay being mined. We make sure that we always have at least 40 years of reserves in all of our major product lines, and then in total, we have much more than that. We always have opportunities to buy more land and reserves. And we're in really, really good shape from that standpoint.

Okay, great. The next question, actually we have a couple questions about the status of antibacterial cat litter, our Cat's Pride antibac. And Tyler asks, how has the uptake been with the Cat's Pride antibacterial product and are there any early success? Oh, sorry, just that. Chris, can you please address that?

Sure. I think I saw a couple of things on the message or in the question board about anti-vac. So I'll tell you two things. In general, we're pleased with our uptake and it's continuing to grow. So our velocities are what I would refer to as solid. We did up until, gosh, I think it was the early part of last quarter. We lacked one state registration for the product, one state EPA registration for the product. We now have that. So that's enabled us to be more aggressive, really, in two places. One, with national retailers that otherwise carry it. But two, to include e-com retailers. So the product is now what I would call it wasn't unavailable on e-com before, but is now much more available. And that actually enables us to be more aggressive with our digital advertising investment. in that item, and it certainly doesn't take any new consumer behavior, but it takes a little bit of education to help people see that we have the only EPA-registered antibacterial cat litter on the market in the U.S. So we're now driving that message a little bit harder via our digital media spend.

Great. Thank you. We have time for one last question, and this is from Bill Anderson from Bard Associates. And he asks, Wade, have you disclosed a total addressable market for your Amlin products?

Yeah, thank you, Leslie. And thank you, Bill, for that question. I'm going to answer it kind of in two parts, because as Amlin goes to market for products that we sell into the poultry, dairy, swine, aqua industries, we're really targeting a couple of different segments. The first is the more traditional market that clay-based products have been utilized for in animal feeds, and that's for mycotoxin mitigation. That market around the world fluctuates, but it's been estimated to be over a billion dollars of opportunity. Some of that is in Europe, again, which is a market that we don't target today. The second part of the market that we target is products that are sold into really what I'll call gut health or products that are sold to improve the productivity of food production animals. And that has been traditionally a market dominated by antibiotics. Antibiotics are used sub-therapeutically principally in animal rations, although over the last couple of decades, products that you'll be familiar with like probiotics or direct-fed microbials, certain types of enzymes or nutraceuticals have also been substituted. That market is much larger, harder to estimate, but certainly well over $8 or $9 billion in terms of opportunity. So the total market opportunity that we target is very large. Again, the mycotoxin side really with our clay-based products, and then the other market I mentioned for gut health is a combination of our clay products, but also with formulated adjuvants that we use in our portfolio.

Great. Thank you, Wade. And before closing, I just want to encourage everyone to vote for the authorization of doubling our shares so that we can execute a two-for-one stocks dividend or split or whatever we're calling it. But your proxies will come out at the end of October. And the reason why it's so important for those of you on the call is because the vote goes by class. So the class B, which my family and I control, we're going to be voting for it. But our vote doesn't matter at all on the common side. And so if you see this as a value or benefit, we hope you'll vote for it. We think it's going to be positive. It'll, as Susan outlined, should increase the daily activity, the liquidity, reduce the average selling price in half if you do two for one. So mathematically, it's going to cut it in half on day one. and that should be more accessible to a wider, hopefully a wider range of investors. So please be on the lookout for your proxies, and we would love you to vote for it. Thank you, everybody, and we will talk to you after the next quarter.

This concludes today's conference call. Thank you for participating. You may now disconnect.